CFPB establishes new innovation unit to give clarity on existing rules


The Consumer Financial Protection Bureau is replacing its Office of Innovation with a new unit to support a broader initiative.

The new “Office of Innovation and Competition” will replace the previous Office of Innovation, which focused on analyzing areas needing special regulatory treatment for individual companies. That office was tasked with processing applications for No-Action letters and the terms of regulatory sandboxes. 

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“After a review of these programs, the agency concludes that the initiatives proved to be ineffective and that some firms participating in these programs made public statements indicating that the Bureau had conferred benefits upon them that the Bureau expressly did not,” said the CFPB in its announcement.

Instead, the new office will “analyze obstacles to open markets, better understand how big players are squeezing out smaller players, host incubation events, and, in general, make it easier for people to switch financial providers,” according to an announcement from the regulator. Instead of focusing on allowances for individual innovators, the new office seeks to broadly promote innovation.

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It says it’s encouraging companies, start-ups and members of the public to file rulemaking petitions for greater clarity on particular rules. 

“This will help level the playing field and foster competition by ensuring any actions the CFPB takes will apply to all companies in the market,” said the announcement.

The unit falls under the CFPB’s Research, Markets, and Regulation division, where it will leverage those resources to examine market-structure problems that hamper innovation. The unit is also tasked with identifying how bigger players, like Big Tech, can threaten fair competition for smaller players. 

The announcement makes no specific mention of cryptocurrency, but the office set the stage for more intervention last month when it invoked a largely unused provision from the Dodd-Frank Act, giving it the ability to supervise “nonbanks” engaged in consumer-facing financial services based on potential risks. That rule will take effect this week. 


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